Video 18:03
Andrew Forrest talks to Lateline live from China

Fortescue Metals Chairman, Andrew Forrest, who is leading a group of 50 Australian companies visiting China with the Prime Minister Julia Gillard, talks about his hopes for business opportunities.

Transcript

EMMA ALBERICI, PRESENTER: Accompanying the Prime Minister on her trip is a delegation of leading business people. Around 150 Australian companies are represented by senior executives including transport mogul Lindsay Fox, Westpac CEO Gail Kelly and the National Australia Bank chairman Michael Chaney.

Andrew Forrest is leading the group. He's the chairman of Fortescue Metals the world's fourth largest iron ore producer and he joins me now from Hainan.

ANDREW FORREST: Look, the opportunities here I think are quite boundless. You've got a country which grew at 7.8 per cent last year which is a massive growth even though their two major customers America and Europe were in the tank. Now of course America and Europe a slowly climbing out.

They're forecast to grow at eight per cent on OECD rates that's enormous. Yet you've got 1.2 billion people here so in terms of the volumetric growth, it is very large and we really need Australia to regain its share to regain its enormous credibility with this country.

It was set up under the Hawke years, under the Keating years, under the Howard years. These guys did a fantastic job. We're really looking for our current leadership to come through strongly, support business, support enterprise, support Education, support finance, support resources, and put Australia very firmly on the psychological map here in China.

EMMA ALBERICI: You just said there you want Australia to regain credibility. What's happened?

ANDREW FORREST: Look, we have just taken our eye off the ball a bit, but it has been very easy to take a good relationship for granted. I've been very busy stressing if you were to buy, say, a car from one of your best friends and you knew the guy well, you'd built up a relationship of trust, you had a relationship that's gone on for some time, someone else was offering you exactly the same car for the same price... well you would buy it off your friend and Australia needs to be back into that position where we are China's one of China most important trading partners, one of their most reliable trading partners, one of the most friendly trading partners and still proudly Australian.

EMMA ALBERICI: What exactly was it that damaged our credibility? You talk about regaining credibility. What damaged the relationship?

ANDREW FORREST: Look, Emma, I'm not going to be drawn there. We just I think took our eye off the ball. That the bilateral relationship between China and Australia needs to be strengthened for a little while. You got a feeling in this country that Australia went from chocolate to boiled lollies. I think we need to be back to chocolates.

I'm out here representing a fantastic country. We can compete for finance, we can compete with law, we can compete with health, we compete with education, we can compete with iron ore. We should be in there saying choose Australia, we're a wonderful country, we're reliable, you can trust us, our rule of law, our sovereignty is predictable. Come Australia's way.

EMMA ALBERICI: But clearly you see a tension in the relationship that needs repair.

ANDREW FORREST: I see Emma, I know you're going to continue winding back on this.

I see a relationship which need to be built much stronger. Is it anywhere near its potential Emma? It isn't. We've got a long way to go.

This will affect the standard of living for every Australian and certainly from our children's perspective if we in dereliction, if we don't pay attention to this Chinese relationship this is no service, there's no good which the Prime Minister referred to which cannot be easy replaced and sold or marketed or serviced to China by some other country.

We're here saying that's great, we know all that. We're not taking you for granted. We're very proud of Australia, we're very proud of how we can help in your service industry, how we can help in your mining and resources sector - choose Australia.

EMMA ALBERICI: Okay well specifically related to the Australian mining industry what are the issues that need addressing?

ANDREW FORREST: Emma I think that we need to have a consistent dialogue with China. I've established here the senior business leaders forum that's ten to a dozen of China's most senior business leaders, the same number of Australians, the two countries are getting together and saying we need to be together... and my answer to your previous question more fully Emma, we need to get together on arts, culture, understanding, friendship, relationship, philanthropy and of course, business and trade, which is what is hogging the headlines.

We actually need a deeper understanding of this country. We need to understand their sport and they need to understand ours. We can build a very firm relationship with China. There are many countries which I can choose and I won't name them Emma, that you wouldn't be comfortable sitting down and having a drink with because you just don't have that natural camaraderie. Well you do in China, they're great people, they're friendly, they're open. They want a great standard of living for their kids. We want a great standard of living for our kids. We just need to deepen this wonderful relationship.

EMMA ALBERICI: Are you concerned at all about the implications of the Government delegation discussing those very fragile issues around human rights and what that might mean to the discussions after that?

ANDREW FORREST: No, not at all. I think as good friends, you should be able to discuss all issues. I think if you trumpeted from the gramophone, I think if you spray it all over the media, your sincerity is going to get doubted. Behind closed door where you can bang the table and say listen, this is where Australia sits, this is where other countries sit, we would like to join us, I'm not just talking about China here I'm just talking about a common value, then behind those closed doors good friends can sort anything out.

I think splashing over headlines isn't the way to go. Gramophone politics only helps you back at home but it doesn't help you back at home in the long term because it destroys trust.

So I'm hoping that our political leaders and our business leaders if we have issues which we have particularly disagreement with, lets hammer it out behind closed doors and let's get on with building a great relationship.

EMMA ALBERICI: You will be attending a round table with the Prime Minister I understand tomorrow. In terms of what will be discussed, what are the priorities for the businesses that will be represented at that particular meeting?

But it is a very strong delegation from the Chinese side there will be an equally strong delegation. It will be about I think education. It will be about finance., it will be about rumour B. It will be about the opening up the relationship between the two countries, one of friendship.

America you may know, Emma has this kind of headline volatile relationship with China. May I assure you that relationship stands on a really strong business and social relationship platform. You can get things said publicly but the relationship is rock solid. Australia needs to follow that great example, build its own rock solid relationship with its major trading partners and of course here in China.

EMMA ALBERICI: What are your Chinese friends telling about their attitudes to investment in Australia?

ANDREW FORREST: There's a country here where you could have gone, say, like Russia where you moved out of communism and just gave all the assets away, and what happened out of that particular lesson, you had the rise of the oligarchs.

So you've got China being much cleverer about it in my humble view. They're slowly privatising their economy. They've now got a massive private sector. They have still got a hangover of large public sector.

But they're privatising, they're corporatising these sectors as quickly as responsible giving ownership back to the people. While there are state-owned enterprises businesses feel the playing field may not be level. From what I see there are pluses and minuses with being owned by a state. It is not necessarily an advantage the whole time.

So I just think let's understand that some of the corporations we're going to deal with will be owned by the state on their way to privatisation and corporatisation and some will be already private or publicly owned as we know them in Australia. I don't think we should share a bias between those. They're really at the bottom line like we are. They're acting for the people of China, they're trying to improve the standard of living for their kids. We're doing exactly the same for Australia acting and representing our country really proudly and trying to improve the standard of living for our kids.

EMMA ALBERICI: What I was getting at was I'm interested to know what the impression is of Chinese business people to investment in Australia by them?

ANDREW FORREST: Look, I think they see Australia as so many Chinese leaders have said to us, you know, this is obviously the country made in heaven. You've got all the resources, you've got great people, smart people, you've got everything which a crowded highly populated countries would love. You've got a very small population. What is it about Australia that makes you so lucky.

I think what it is about Australia is our own people and Chinese look at us and think we have a very fortunate people and they're correct, we are have a very fortunate people, but we can't afford to become lazy. We can't afford to lose our productivity, act like the spoilt child which has everything and then stops trying because in the world stage if Australia were to stop trying, we would lose business, we would lose relationships and that would be, Emma, a slow insidious move like a slow inter-generational creeping cancer. You wouldn't notice it over time but from chapter to chapter you would certainly notice that other countries have leapt ahead, Australia drifted behind.

I think what I'm looking for out of this relationship is the same as what China is, what the Australian business people and I hope Australia's political leaders are looking for. We're a country which is not sitting back on our laurels not saying hey we've been gifted with God by great smart people and beautiful resources, a fantastic country. We're going to get in there and compete as hard as we can with all those other countries that are busy trying to take Australia's market share.

EMMA ALBERICI: There were reports during the week some Chinese business people were suggesting it is difficult to invest in Australia and that there are too many hurdles. Is that what you're hearing?

ANDREW FORREST: I just stand on the record. I think there's hundreds of approvals which have been made by countries all over the world, have been received by countries all over the world and by their own domestic businesses, to invest in Australia. I think we are a friendly country.

We need to make sure that it passes the national interest tick. You have that in China too. There's a major national interest hurdle here in China. There is of course in Australia, but Australia is quite a unique country. It has all thoughts beyond its own resources. It needs external capital, it needs external investors. It had it from Britain in the early days, it had it from North America in the car industry, from Japan, in the 80 and 90s in our property sector. At each time there were real concerns in Australia I think completely unfounded somehow you would get Tasmania being towed over to Tokyo. That never happened.

When countries invest in Australia they grow our economy. They grow our standard of living. They pay their taxes. They pay their royalties and rates and their leases and they pay even more taxes and if there's profits it goes back to their country. All of those things have happened which are positive, positive, positive from a incoming investor, it is a net growth to our economy and we should be encouraging it.

EMMA ALBERICI: Have your business partners...

ANDREW FORREST: You can't take the farms away with them.

EMMA ALBERICI: Have your business partners around the world and in Asia in particular about the issues surrounding 457 visas, the proposed changes and the surrounding debate around that issue?

ANDREW FORREST: In many cases Emma they're too polite. It seems a joke. We have 457 all through the highest offices in politics. We have them through the highest offices in corporate. We have them all through business. When Australia needs a hand it reaches out and gets it. The skill base is shared and the country is generally up skilled.

I don't really understand what the drama is. We've found we can never employ enough Australians. The only regret I have about my job I get way more applicants than what I'm able to employ. I don't really see where all this is heat is coming from. It is like the drama around North Korea. There's heat, dust and light but North Korea couldn't fight its way out of a wet paper bag. I don't think there should be any drama around 457s. It is necessary to the country. We should be supporting it.

EMMA ALBERICI: There is a lot of talk obviously about businesses in Australia and the cost of doing business in Australia. You and others have talked about the concerns about being internationally' competitive on that score. Tony Abbott has said he'll release the coalition's industrial relations policy within a matter of weeks. What's on your wish list?

ANDREW FORREST: Emma, look, once again, I've found that you can have a direct relationship with your workforce. I'm always up at our sites, construction sites, our operation sites, we're sharing the Fortescue family ethos, we are encouraging the fundamental values which have brought Fortescue up from the dust of their boots to a great Australian company. I haven't found any issues with Labor relations.

I do know however that there are many projects in Australia which are seeking to be manufactured offshore. There are big operations which are have a look at the United States oil industry, they can look at building a project in Australia for approximately twice the cost they can build the same project in Canada or North America. Personally I don't think that's anything we should be proud of. That's getting a little bit along the lines of that child who has had everything given to them and is thinking we can sit back, let the world come to us, it just won't happen, the world will pass us by. We need to be productive. We need to compete.

EMMA ALBERICI: How do you increase productivity?

ANDREW FORREST: Look, I think simply making the workforce part of the incentive plans of the success of the company. Making them feel as they should they're part of the company, that they're part of the family which runs it, and treating them like that. Treating them as you would your own brother and sister, and really encourage them.

Incentives where Australians are aspirational. They like to get into the bracket which might pay higher taxes. That's a good thing. If you can provide encouragement, if you can provide enthusiasm and if you can provide financial incentives, people feel like they own the business. That I think is a really good model. It is the one which we used successfully at Fortescue.

There's nothing magical about Fortescue. We didn't get free kicks with oil bodies, we didn't get free kicks with exploration but we got a great free kick with the culture of our people. That was when we had 5-5,000 people, we had out there proud of our company.

EMMA ALBERICI: Does the government has a role to play in lifting productivity?

ANDREW FORREST: I'm finding that there's restrictions everywhere being placed between myself and my friends. I don't see why someone who has been able to ring me regularly suddenly has to ring me through an intermediary. If someone has a work issue, anything getting in the road of their enjoyment of their job, their satisfaction of that job, their logical thinking, if there's a road which does a big U, in a project it could go straight across the top of that U, then they're coming to me with those ideas.

I don't see why a highly structured workplace actually helps. You've got... I'm a worker, I'm a manager, I'm a leader and I have people who feel that we're one and the same. Why you have a whole bunch of intermediaries telling me what I can say or telling them what they can say to me I personally think is a joke.

I built this company up from no people two men and a dog, we still argue which one was the dog, it is now employing thousands. We listened very carefully to our workplace and we share a common set of values. I feel having a whole heap of hierarchy imposed upon us isn't helpful to make our workers more successful and that is my job.

EMMA ALBERICI: Andrew Forrest we have to leave it there. Thanks so much for taking the time to speak to us this evening.